Buy - Sell

REAL ESTATE SECTOR > Reportedly, Finance Minister Şimsek stated they will maintain the new housing VAT law. Reminder => the new law makes NO change in 18% tax on homes 150sqm+. For smaller than 150sqm => 3 different tax segments acc. to value of land/sqm: TL0-500 @ 1%, TL500-1k @ 8% & TL1k+ @ 18%. Urban transformation & reserve areas are exempt (no chng in tax regime). Prev'ly => > 150sqm+ were taxed @ 18% VAT vs below 150sqm @ 1%. On Jan 4th, Min of Environment & Urban Planning stated that the gov’t might revise new housing tax law, after seeing its effects on construction sector. Chairman of REITs Association, reportedly says new VAT law will affect real estate market -VELY by 25%-30% in 2014.  

 

AEFES (HOLD; TP TL26.5) 4Q12 volumes > Total sales vol down 7% y/y on a pro-forma basis (2012 total vol contraction @ 3.8%) = > TR beer sales vol down 1.6% y/y (our est -2%) in 4Q => due mainly to high beer prices. Recall that the Government had incr’d excise taxes on beer by 17% as from Sep 22^nd, 2012 and the Co had raised its unit prices by 12% to pass on the tax increase. Int’l beer sales vol down 9.5% y/y in 4Q (in line w our est) on pro-forma basis, despite a rather low base in 4Q11=> due to weak consumption, higher pricing levels relative to the competitors and merger related issues. Overall, the Co lost market share in Russia in 2012. Though we maintain our f/casts for 2013 => TR 1% vol growth and Int’l flat, we believe downside risks are still significant, for international vol growth in particular.

 

DOAS (BUY; TP TL 9.68) > Chairman Aclan Acar stated that for 2013 he expects DOAS to attain market share similar to 2012 lvls (LV: 15.8%). After 3Q12 DOAS had guided for 13-14% mkt shr (including HCVs.)  For 2013, we incorporated 14.3% in LV as we believed new launch of competitive products would lead to some normalization in mkt shr from its peak in 2012. However, Acar’s statements hint => 1) VW might have opted to leverage on mkt shr momentum in 2012 & might continue to support DOAS at that front. Note that TR is becoming a core market for VW => hinted by the launch of new Golf @ the same time with the EU markets. Our normalized long term mkt shr est is @ 13.25% => All else equal, +0.5pp chng in our est would change our valuation by 3.4%. We reiterate our +VE view => DOAS remains our top pick in auto sector.

 

ENKAI (BUY, TP TL 5.60) > According to Hurriyet newspaper, Enka Insaat was awarded a contract to complete the construction of East Wing of Federation Towers in Moscow (Vostok Tower). The construction work at the East Wing was halted after the 2008 crisis. According to the reports, the original project size was USD240m; however, we est the award to Enka to be smaller, as the building is now half completed. Note that Enka’s construction backlog as of Sep’12 was USD3.2b.  We view the development as sl +VE.